An Innovation Eclipse

by Braden Kelley

The failure of Solyndra last week – a United States solar energy venture backed by $535 million in federal loan guarantees drew the ire of many people concerned with the state of the federal budget deficit and the growing national debt. But was the federal government wrong to offer loan guarantees to Solyndra?

This is the question many people are asking this week, and I would be interested to hear what you think.

In a previous article I stated some of my thoughts on the role the federal government should play in the overall innovation ecosystem in the United States, and I stand by what I said in that article – An Open Letter on Innovation to President Obama.

To quote the relevant part for today’s discussion:

We need to take a step back and define what the role of government is in our overall innovation efforts as a country:

What are the big research challenges that companies are unwilling to spend on that if pursued and conquered, would unleash a wave of innovation?

How can companies and the government work together to fund and share technology that doesn’t define competition, but does accelerate productivity and global competitiveness of U.S. firms against foreign competitors?

How can we restructure our tax system to reward successful American firms for taking the bigger risks that will help them continue to lead their industries in the future?

How can we incent American exporters trailing foreign competitors to try and leapfrog and disrupt foreign competitors, take market share, and create jobs in this country?

Should we build a deep innovation coaching capability into the Small Business Administration so that small companies can get access to innovation education?

If the last wave of innovation in this country was built on the passion and ideas of foreign born entrepreneurs, should we not be doing more (not less) to encourage the world’s best to come here and study and start businesses?

If we are in a war for innovation, should we not be building innovation alliances with countries in the same way we have built military alliances for centuries? More and more companies are doing this, why not countries?

You’ll notice that nowhere on this list was funding companies. This is a special skill and one that most people wouldn’t think about the government as having, especially when you take into account that identifying a potentially successful startup is not about the idea, but about identifying strong management teams that have the capability to lead a team of people to find and overcome the critical flaws in the founding idea and get the final solution to market. Funding companies isn’t something that the government should be focusing on – even when they pursue it in a portfolio approach (Solyndra represents only 2% of the Department of Energy’s committed loan guarantees).

From an outsider’s perspective the $535 million would have been better spent in discovering and transferring a platform technology to multiple companies that could then work towards getting the basic platform technology to market (funded by the private sector). Then other American entrepreneurs could have generated even more jobs by building upon it. Think about the growth in the US Economy that the platform technology of the Internet generated. It is too soon to see whether the failure of Solyndra will be a big blow or a small blow to the Obama administration’s innovation efforts, but it probably also didn’t help that last week Alan Greenspan was quoted as saying:

“Can innovation create jobs? The answer is that is not its focus,”

“Jobs are created in that process and what happens in private industry as technology decreases unit costs and especially labor costs, profits go up, companies expand and then they hire people,”

“Innovation reduces jobs, and there is no way getting around that syllogism,”

Alan Greenspan may be simplifying things here and ignoring that there are more types of innovation than cost innovation, but hey, let’s give the guy a break as innovation is not really his focus.

Also this week it emerged that Thomas Friedman has a new book coming out with Michael Mandelbaum called That Used to be Us that essentially says the United States must innovate or else. After all, we’re never going to be cheaper, so we have to better and more innovative. That leaves a huge challenge for the government of the United States.

To replace all of the debt-fueled, consumption-related jobs that will likely never come back, the United States must come together as a collection of public, private, and charitable institutions to re-train our workforce and change our mindset as a country to focus not on consumption but creation in order to generate the new jobs necessary to reduce a 9.2% unemployment rate.

But for all of the focus in the media and academia on improving the quality of Science, Technology, Engineering, and Math (STEM) education in America, we must also introduce an equally strong focus on creating young people that are equally capable of becoming the flexible and adaptable workforce that organizations will need to continue to succeed at innovation. This includes helping reinforce the value of unplugging in our always-on society that suffers from expectations of immediate response.

All of this taken together still shows that the United States still needs a cohesive, long-term, committed innovation strategy if we are to prevent the country’s continued loss of ground to other rising economies over time. Because any innovation strategy requires long-term focus and commitment, I remain doubtful that the United States politicians will be up to the task, and very doubtful that in an era of collapsing education budgets that we will be able to train our children to be more flexible and adaptable with the requisite skills in language to translate the value of their ideas, the technical skills to create the value, and the logic to create the systems necessary to make it easier to access the value of their ideas. But we will see.

It is my belief as I have said before in my article Stop Praying for Education Reform that we must come together outside the normal school day to educate our children in the skills necessary to create the innovation capacity they will need to take our country forward through the rest of this century, and help to maintain its place near the top of the economic pyramid.

Ultimately the question is not whether the United States CAN still lead the world in innovation, but whether we have the WILL.

No comments

I disagree with Greenspan. Innovation, like say the production line, definitely leads to jobs. I would also say though that it is better served if the banks are the ones funding these companies, or the venture capitalists. After all, it is why venture capitalists exist.

I also believe that the skills required to innovate should be part and parcel of education, rather than having to consume more of a child’s time, the time to be a child rather than an adult learning about innovation capacity. Children are chock full of imagination. Somewhere we adults kill that . And in America especially so, and hence our current educational system and our world rankings in student abilities.

All nutshell comments to be sure. Educational transformation needs to happen. Investment in entrepreneurship needs to pick up the pace, and especially in those industries that will transform our infrastructure and use of energy to make that infrastructure sustainable for the long term as well as beneficial to the users and the planet we live and depend on.

I do agree with Rob, and if I may add, innovation doesn’t just create jobs, but it also produces skilled, intellectual, and creative people. If employees would want to keep their jobs, they should be able to train themselves and possess their abilities.

As for the rest of the article, it’s pretty obvious that industries, whether huge or small, requires more than just financial support from the government.

For me anyway, all conversations about innovation begin with how we educate people – younger and older. In order to innovate, a person has to know how to, and enjoy, continuous learning. And not everyone does. Teaching oneself new things is now a requirement of good businesses. It wasn’t always so.

At 25, I was expected to learn my job and then do it well. And there were limits placed on what I was allowed to know about the companies I worked for. I couldn’t learn at work even if I wanted to.

Now, 20 years later, I am required to learn something new every week, no matter the size of the business. Work has become dynamic and as a result, both more interesting and more demanding. How to value, handle, and live comfortably with that kind of a life is what people need to learn if America is going to remain an innovative nation.

Unfortunately, we are stuck in the middle of paradigms right now. And this kind of working life is one that not everyone in America does, or will, find interesting or embraceable. That is where some real thought and structure will need to come into play in public education and employment policy.

I have a different perspective on this. My husband is on some DOE committee to review the technology of companies who have made the final cut for potential funding/loans from DOE. One of the companies he reviewed was Solyndra. This was a while ago obviously. He thought highly of the the technology but thought it would be very hard to manufacture at a reasonable cost because of its design, materials etc. So, great wonderful technology, lousy cost structure to make. However, because he was just to assess technology (there were others to assess commercialization), what he thought about commercialization didn’t matter – after all, he’s just a Physicist, not a business guy. If a physicist could see this, I think a lot of other people could too. And it’s now emerging that there were ‘other’ issues with Solyndra….

I think the gov’t should fund & invest in R&D – fully – but stay out of the marketplace…manufacturing and adoption should not be subsidized – just look at what’s happening in Europe (e.g., Germany) with the subsidies for green (solar) energy going away….